Fierce competition for 5G subscribers undermine Korea telecom ARPU, says Digitimes Research
Thursday 31 December 2020
South Korea’s top-3 telecom carriers saw their wireless businesses’ average revenues per user (ARPU) slip in the first three quarters of 2020 due to fierce competition for 5G subscribers, while their plan to establish 28GHz base stations will be delayed, according to Digitimes Research’s finding.
Although 5G commercialization boosted the top-3 telecom carriers’ quarterly wireless business revenues during the first three quarters of 2020 compared to their corresponding quarters in 2019, their ARPU still declined due to the fierce competition among them to attract 5G subscribers.
South Korea had over 70 million mobile service subscribers as of third-quarter 2020 with 4G users accounting for more than 80% and 5G services rising to 13.2%.
The top-3 South Korean telecom carriers all saw over 14% of their subscribers being 5G users in the third quarter. Mobile virtual network operators (MVNOs) in South Korea, which were slower in offering 5G services compared to major telecom carriers, are the key factor dragging down South Korea’s overall 5G penetration rate.
At the end of 2020 or early 2021, South Korea’s overall 5G service subscribers are expected to break 10 million with SK Telecom to have a chance of seeing over five million users and KT three million.
With smartphone brands including Samsung Electronics, LG Electronics and Apple starting to release 5G devices in South Korea in October and local telecom carriers offering better subsidies, demand for 5G smartphones is expected to increase and boost the number of South Korea’s 5G service subscribers in the fourth quarter.
The South Korea government has confirmed that the top-3 telecom carriers together had built a total of 105,000 base stations at 3.5GHz nationwide as of the end of August 2020, and should achieve the goal of building a total of 150,000 units in 10 years earlier than expected.
However, the telecom carriers are seriously behind for the target of building 15,000 base stations at 28GHz by the end of 2021.